Reckitt Pays 37% Premium for Adams Respiratory

Reckitt Benckiser plc said Monday it will purchase Adams Respiratory Therapeutics (ARXT) for $2.3 billion in cash. Reckitt, maker of Strepsils throat lozenges, will pay $60 for each share of Adams, a 37% premium over Friday's close. Adams is a specialty pharmaceutical firm which focuses on late-stage development of pharmaceuticals for the treatment of respiratory disorders. Martin Deboo, an analyst at Investec Securities said, "They are paying quite a premium" for Adams, "it will be a challenge to unlock value." For the steep price, Reckitt, the word's largest maker of household cleaners, will add to its healthcare division and enter the U.S. market for over-the-counter drugs. Bart Becht, Chief Executive Officer of Reckitt Benckiser said, "The growth potential of the business, the importance of gaining an entry in the USA healthcare market, and the synergies available make Adams a very attractive addition to our portfolio." The deal will probably add to Reckitt's profits right away, it said excluding the $60 million in reorganization costs. Shares of Adams Respiratory Therapeutics were up 35.4% to $59.12 in early afternoon trading.

Sources: Press release, Bloomberg

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